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Brett Stern was hired during January 2020 to manage the homeproducts division of Hi-Tech Products. As part of his employmentcontract, he was told that he would get $6,000 of additionalbonus for every 1% increase that the division’s profitsexceeded those of the previous year.Soon after coming on board, Brett met with his plant managers andexplained that he wanted the plants to be run at full capacity.Previously, the plant had employed just-in-time inventory practicesand had consequently produced units only as they were needed. Brettstated that under previous management the company had missed out ontoo many sales opportunities because it didn’t have enoughinventory on hand. Because previous management had employedjust-in-time inventory practices, when Brett came on board therewas virtually no beginning inventory. The selling price andvariable costs per unit remained the same from 2019 to 2020.Additional information is provided below.
Brett Stern was hired during January 2020 to manage the home products division of Hi-Tech Products. As part of his employment contract, he was told that he would get $6,000 of additional bonus for every 1% increase that the division's profits exceeded those of the previous year. Soon after coming on board, Brett met with his plant managers and explained that he wanted the plants to be run at full capacity. Previously, the plant had employed just-in-time inventory practices and had consequently produced units only as they were needed. Brett stated that under previous management the company had missed out on too many sales opportunities because it didn't have enough inventory on hand. Because previous management had employed just-in-time inventory practices, when Brett came on board there was virtually no beginning inventory. The selling price and variable costs per unit remained the same from 2019 to 2020. Additional information is provided below. Net income Units produced Unit sold Fixed manufacturing overhead costs Fixed manufacturing overhead costs per unit (a) * Your answer is incorrect. +A 2019 Bonus based upon net income $ $355,000 30,000 30,000 $1,440,000 $48 Calculate Brett's bonus based upon the net income shown above. 2020 $660,300 36,000 30,000 $1,440,000 516000 $40